FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended March 31, 2003

     Commission File No. 0-20050

                        PRINCETON NATIONAL BANCORP, INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                    36-32110283
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                     606 S. Main Street, Princeton, IL 61356
              (Address of principal executive offices and Zip Code)

                                 (815) 875-4444
              (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes _X_ No ___

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ___ No _X_


     As of April 23, 2003, the registrant had outstanding 3,201,457 shares of
its $5 par value common stock.

                               Page 1 of 20 pages
<PAGE>

                          PART I: FINANCIAL INFORMATION

     The unaudited consolidated financial statements of Princeton National
Bancorp, Inc. and Subsidiary and management's discussion and analysis of
financial condition and results of operations are presented in the schedules as
follows:

     Schedule 1: Consolidated Balance Sheets
     Schedule 2: Consolidated Statements of Income and Comprehensive Income
     Schedule 3: Consolidated Statements of Stockholders' Equity
     Schedule 4: Consolidated Statements of Cash Flows
     Schedule 5: Notes to Consolidated Financial Statements
     Schedule 6: Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
     Schedule 7: Controls and Procedures


                           PART II: OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
     (a)  Exhibits:

          99.1  Certification of Tony J. Sorcic
          99.2  Certification of Todd D. Fanning

     (b) No reports on Form 8-K were filed by the Corporation for the quarter
ended March 31, 2003.


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          PRINCETON NATIONAL BANCORP, INC.

Date: May 12, 2003                        By /s/ Tony J. Sorcic
                                             -----------------------------------
                                             Tony J. Sorcic
                                             President & Chief Executive Officer

Date: May 12, 2003                        By /s/ Todd D. Fanning
                                             -----------------------------------
                                             Todd D. Fanning
                                             Vice-President &
                                             Chief Financial Officer

                                       2
<PAGE>

                                 CERTIFICATIONS

I, Tony J. Sorcic, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Princeton
         National Bancorp, Inc;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition , results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

                  a)       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiary, is
                           made known to us by others within those entities,
                           particularly during the period in which this
                           quarterly report is being prepared;

                  b)       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

                  c)       presented in this quarterly report our conclusions
                           about the effectiveness of the disclosure controls
                           and procedures based on our evaluation as of the
                           Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

                  a)       all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and
                  b)       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:    5-12-03                              /s/ Tony J. Sorcic President & CEO
         --------------------                 -------------------------------
                                              Signature-Title

                                        3
<PAGE>

I, Todd D. Fanning, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Princeton
         National Bancorp, Inc;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition , results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

                  a)       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiary, is
                           made known to us by others within those entities,
                           particularly during the period in which this
                           quarterly report is being prepared;

                  b)       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

                  c)       presented in this quarterly report our conclusions
                           about the effectiveness of the disclosure controls
                           and procedures based on our evaluation as of the
                           Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

                  a)       all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and
                  b)       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:    5-12-03                       /s/ Todd D. Fanning, Vice President & CFO
         ------------------            ----------------------------------------
                                       Signature-Title

                                        4
<PAGE>

                 PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY      Schedule 1
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                    (dollars in thousands, except share data

<TABLE>
<CAPTION>
                                                                  MARCH 31,    December 31,
                                                                     2003          2002
                                                                  ---------     ---------
<S>                                                               <C>           <C>
ASSETS
Cash and due from banks                                           $  14,641     $  13,939
Interest-bearing deposits with financial institutions                10,158         1,706
Federal funds sold                                                   12,040         3,225
                                                                  ---------     ---------
          Total cash and cash equivalents                            36,839        18,870

Loans held for sale, at lower of cost or market                       2,766         6,761
Investment securities:
      Available-for-sale, at fair value                             151,534       157,881
      Held-to-maturity, at amortized cost                            13,731        11,437
                                                                  ---------     ---------
          Total investment securities                               165,265       169,318
                                                                  ---------     ---------
Loans:
      Loans, net of unearned interest                               358,946       357,359
      Allowance for loan losses                                      (2,546)       (2,660)
                                                                  ---------     ---------
          Net loans                                                 356,400       354,699
                                                                  ---------     ---------

Premises and equipment, net of accumulated depreciation              13,203        13,388
Bank-owned life insurance                                            13,691        13,566
Interest receivable                                                   3,929         5,180
Goodwill, net of accumulated amortization                             1,355         1,355
Intangible assets, net of accumulated amortization                    1,681         1,732
Other real estate owned                                                  94            75
Other assets                                                          2,377         2,431
                                                                  ---------     ---------
        TOTAL ASSETS                                              $ 597,600     $ 587,375
                                                                  =========     =========

LIABILITIES
Deposits:
     Demand                                                       $  57,336     $  58,655
     Interest-bearing demand                                        162,326       155,549
     Savings                                                         55,932        51,750
     Time                                                           249,572       245,313
                                                                  ---------     ---------
            Total deposits                                          525,166       511,267

Borrowings:
     Customer repurchase agreements                                   8,048        10,044
     Advances from the Federal Home Loan Bank                         5,600         5,750
     Interest-bearing demand notes issued to the U.S. Treasury          736         2,397
     Note payable                                                     1,300         1,300
                                                                  ---------     ---------
            Total borrowings                                         15,684        19,491

Other liabilities                                                     5,399         5,543
                                                                  ---------     ---------
       TOTAL LIABILITIES                                            546,249       536,301
                                                                  ---------     ---------

STOCKHOLDERS' EQUITY
Common stock:  $5 par value, 7,000,000 shares
     authorized; 4,139,841 issued                                    20,699        20,699
Surplus                                                               6,727         6,612
Retained earnings                                                    36,471        35,255
Accumulated other comprehensive income, net of tax                    1,991         2,218
Less: Cost of 938,384 and 906,155 treasury shares at
     March 31, 2003 and December 31, 2002, respectively             (14,537)      (13,710)
                                                                  ---------     ---------
       TOTAL STOCKHOLDERS' EQUITY                                    51,351        51,074
                                                                  ---------     ---------
       TOTAL LIABILITIES AND
           STOCKHOLDERS' EQUITY                                   $ 597,600     $ 587,375
                                                                  =========     =========
</TABLE>

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       5
<PAGE>

                 PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY      Schedule 2
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                    For the Three Months
                                                                       Ended March 31,
                                                                     2003          2002
                                                                  ----------    ----------
<S>                                                               <C>           <C>
INTEREST INCOME:
     Interest and fees on loans                                   $    5,984    $    6,281
     Interest and dividends on investment securities                   1,804         1,911
     Interest on federal funds sold                                       20            35
     Interest on interest-bearing time deposits in other banks            16            25
                                                                  ----------    ----------

            Total interest income                                      7,824         8,252

INTEREST EXPENSE:
     Interest on deposits                                              2,770         3,448
     Interest on borrowings                                              108           143
                                                                  ----------    ----------

            Total interest expense                                     2,878         3,591
                                                                  ----------    ----------

NET INTEREST INCOME                                                    4,946         4,661
Provision for loan losses                                                100           225
                                                                  ----------    ----------

NET INTEREST INCOME AFTER PROVISION
     FOR LOAN LOSSES                                                   4,846         4,436

NON-INTEREST INCOME:
     Trust & farm management fees                                        322           303
     Service charges on deposit accounts                                 722           671
     Other service charges                                               133           165
     Gain on sales of securities available-for-sale                        0            40
     Brokerage fee income                                                131           179
     Mortgage banking income                                             633           271
     Bank-owned life insurance income                                    150           163
     Other operating income                                               72           101
                                                                  ----------    ----------

            Total non-interest income                                  2,163         1,893

NON-INTEREST EXPENSE:
     Salaries and employee benefits                                    2,571         2,441
     Occupancy                                                           307           298
     Equipment expense                                                   396           356
     Federal insurance assessments                                        55            53
     Intangible assets amortization                                       52            52
     Data processing                                                     179           184
     Other real estate owned expenses                                      8             0
     Other operating expense                                             960           851
                                                                  ----------    ----------

            Total non-interest expense                                 4,528         4,235
                                                                  ----------    ----------

INCOME BEFORE INCOME TAXES                                             2,481         2,094
Income tax expense                                                       709           576
                                                                  ----------    ----------

NET INCOME                                                        $    1,772    $    1,518
                                                                  ==========    ==========


NET INCOME PER SHARE:
     Basic                                                              0.55          0.46
     Diluted                                                            0.55          0.46

Basic weighted average shares outstanding                          3,221,291     3,304,440
Diluted weighted average shares outstanding                        3,250,428     3,317,809
</TABLE>

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       6
<PAGE>

                 PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY      Schedule 2
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     For the Three Months
                                                                        Ended March 31
                                                                        2003        2002
                                                                      -------     -------
<S>                                                                   <C>         <C>
Net Income                                                            $ 1,772     $ 1,518

  Other comprehensive income (loss), net of tax

          Unrealized holding loss arising during the period              (227)       (693)
           Less:  Reclassification adjustment for realized gains
                      included in net income                                0         (25)
                                                                      -------     -------

  Other comprehensive income loss                                        (227)       (718)
                                                                      -------     -------

Comprehensive income                                                  $ 1,545     $   800
                                                                      =======     =======
</TABLE>









           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       7
<PAGE>

                 PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY      Schedule 3
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                    For the Three Months
                                                                                        Ended March 31
                                                                                      2003          2002
                                                                                    --------      --------
<S>                                                                                 <C>           <C>
Balance, January 1                                                                  $ 51,074      $ 47,500

     Net income                                                                        1,772         1,518
     Cash dividends  ($0.15 per share in 2003, and $.13 per share in 2002)              (485)         (429)
     Other comprehensive loss, net of tax                                               (227)         (718)
     Purchases of treasury stock  (40,000 shares in 2003, and 0 shares in 2002)         (878)            0
     Exercise of stock options and re-issuance of treasury stock
              (7,085 shares in 2003 and 444 shares in 2002)                               81             2
     Sales of treasury stock  (686 shares in 2003, and 1,028 shares in 2002)              14            16
                                                                                    --------      --------

Balance, March 31                                                                   $ 51,351      $ 47,889
                                                                                    ========      ========
</TABLE>









           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       8
<PAGE>

                 PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY      Schedule 4
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                              For the Three Months
                                                                                 Ended March 31
                                                                               2003         2002
                                                                             --------     --------
<S>                                                                          <C>          <C>
OPERATING ACTIVITIES:
     Net income                                                              $  1,772     $  1,518
     Adjustments to reconcile net income to net
          cash provided by operating activities:
              Depreciation                                                        353          298
              Provision for loan losses                                           100          225
              Amortization of other intangible assets                              52           52
              Amortization of premiums on investment
                 securities, net of accretion                                     421          158
              Gain on securities transactions, net                                  0          (40)
              Gain on sale of premises and equipment                               (2)           0
              FHLB stock dividends                                                (22)         (24)
              Loans originated for sale                                       (18,077)      (7,706)
              Proceeds from sales of loans originated for sale                 22,072       10,481
              Decrease in interest payable                                       (285)        (541)
              Decrease in interest receivable                                   1,251        1,165
              Increase in other assets                                            (91)        (230)
              Increase in other liabilities                                       285          276
                                                                             --------     --------

                NET CASH PROVIDED BY OPERATING ACTIVITIES                       7,829        5,632
                                                                             --------     --------

INVESTING ACTIVITIES:
     Proceeds from sales of investment securities available-for-sale                0        1,308
     Proceeds from maturities of investment securities available-for-sale      10,701       11,993
     Purchase of investment securities available-for-sale                      (8,188)     (17,920)
     Proceeds from maturities of investment securities held-to-maturity           770        1,079
     Purchase of investment securities held-to-maturity                             0         (437)
     Proceeds from sales of premises and equipment                                  2            0
     Net increase in loans                                                     (1,801)      (4,779)
     Purchases of premises and equipment                                         (168)        (218)
                                                                             --------     --------

                NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES             1,316       (8,974)
                                                                             --------     --------
FINANCING ACTIVITIES:
     Net increase (decrease) in deposits                                       13,899       (5,082)
     Net (decrease) increase in borrowings                                     (3,807)         755
     Dividends paid                                                              (485)        (429)
     Purchases of treasury stock                                                 (878)           0
     Exercise stock options                                                        81            2
     Sales of treasury stock                                                       14           16
                                                                             --------     --------

                NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES             8,824       (4,738)
                                                                             --------     --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               17,969       (8,080)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                               18,870       33,726
                                                                             --------     --------

CASH AND CASH EQUIVALENTS AT MARCH 31                                        $ 36,839     $ 25,646
                                                                             ========     ========

--------------------------------------------------------------------------------------------------

Supplemental  disclosures of cash flow information: Cash paid during
              the period for:
                    Interest                                                 $  3,163     $  4,132
                    Income taxes                                             $    105     $    125

Supplemental disclosures of non-cash flow activities:
               Loans transferred to other real estate owned                  $    27      $      0
</TABLE>

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       9
<PAGE>

                                                                      Schedule 5

                 PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information required by accounting principles generally accepted in the United
States of America for complete financial statements and related footnote
disclosures. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) considered for a fair presentation of the results for
the interim period have been included. For further information, refer to the
consolidated financial statements and notes included in the Registrant's 2002
Annual Report on Form 10-K. Results of operations for interim periods are not
necessarily indicative of the results that may be expected for the year. Certain
amounts in the 2002 consolidated financial statements have been reclassified to
conform to the 2003 presentation.

(1) EARNINGS PER SHARE CALCULATION

     The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated (in thousands, except share data):

                                                   Three Months Ended
                                                        March 31,
                                                  2003            2002
                                               ----------      -----------

Numerator:
         Net income                            $    1,772      $     1,518

Denominator:
         Basic earnings per share-
         weighted average shares                3,221,291        3,304,440

         Effect of dilutive securities-
         stock options                             29,137           13,369
                                               ----------      -----------
         Diluted earnings per share-
         adjusted weighted average shares       3,250,428        3,317,809

Net income per share:

         Basic                                 $     0.55           $ 0.46

         Diluted                               $     0.55           $ 0.46

                                       10
<PAGE>

(2) GOODWILL AND INTANGIBLE ASSETS
----------------------------------

     The balance of goodwill, net of accumulated amortization, totaled
$1,355,000 at March 31, 2003 and December 31, 2002. The balance of intangible
assets, net of accumulated amortization, totaled $1,681,000 and $1,732,000 at
March 31, 2003 and December 31, 2002, respectively.

         The following table summarizes the Corporation's intangible assets,
which are subject to amortization, as of March 31, 2003 and December 31, 2002.

<TABLE>
<CAPTION>
                                           2003                                 2002
                                           ----                                 ----
                              Gross Carrying   Accumulated        Gross Carrying     Accumulated
                                  Amount       Amortization           Amount        Amortization
                              --------------   ------------       --------------    ------------
<S>                               <C>          <C>                   <C>           <C>
Core deposit intangible           $  2,968     $  (1,352)            $  2,968      $  (1,303)
Other intangible assets                160           (95)                 160            (93)
                                  --------     ---------             --------      ---------
         Total                    $  3,128     $  (1,447)            $  3,128      $  (1,396)
                                  ========     =========             ========      =========
</TABLE>

     Amortization expense totaled $52,000 both for the first quarter of 2003 and
2002, respectively. The amortization expense will be approximately $156,000 for
the remainder of 2003 and will be approximately $205,000 for each of the next
five years.

     The Corporation's other intangible assets consist of originated mortgage
servicing rights which are included in other assets on the consolidated balance
sheets. Mortgage servicing rights are amortized in proportion to, and over the
period of, estimated net servicing income similar to the interest method using
an accelerated amortization method and are subject to periodic impairment
testing. As of March 31, 2003 no impairment had been recorded. Changes in the
carrying value of capitalized mortgage servicing rights are summarized as
follows:

(in thousands)

Balance, January 1                            $    970
         Servicing rights capitalized              208
         Amortization of servicing rights          (89)
         Impairment of servicing rights              0
                                              --------
Balance, March 31                             $  1,089
                                              ========

     Amortization expense for the mortgage servicing rights asset are based on
assumptions made during each reporting period. Such assumptions include, but are
not limited to, the current level of interest rates and the forecasted
prepayment speeds. Actual amortization expense is also affected by the amount of
loans sold with servicing retained.

                                       11
<PAGE>

     The following table shows the future estimated amortization expense for
mortgage servicing rights based on existing balances as of March 31, 2003. The
Corporation's actual amortization expense in any given period may be
significantly different from the estimated amounts displayed depending on the
amount of additional servicing rights, changes in mortgage interest rates,
estimated prepayment speeds, and market conditions.

ESTIMATED AMORTIZATION EXPENSE:

                                                        Amount (in thousands)
                                                        ---------------------
For the nine months ended December 31, 2003                  $   245
For the year ended December 31, 2004                             268
For the year ended December 31, 2005                             206
For the year ended December 31, 2006                             153
For the year ended December 31, 2007                             104
For the year ended December 31, 2008                              61
Thereafter                                                        52

(3) STOCK OPTION PLAN
---------------------

     The Corporation accounts for the stock-based compensation plan under APB
Opinion No. 25. For the stock option program, no compensation cost is recognized
in connection with the granting of stock options with an exercise price equal to
the fair market value of the stock on the date of the grant. In accordance with
the disclosure requirements of FAS 123, as amended by FAS 148, the following
table provides the pro forma effect on net income and earnings per share if the
fair value method of accounting for stock-based compensation had been used for
all awards:

                                            For the Three Months Ended March 31,
                                            ------------------------------------
(in thousands, except per share data)              2003              2002
                                                   ----              ----
Income as reported                               $ 1,772           $ 1,518
Deduct: Stock-based compensation, net of
         tax, that would have been reported
         if the fair value based method had
         been applied to all awards                  (60)              (30)
                                                 -------           -------
Pro forma net income                             $ 1,712           $ 1,488
                                                 =======           =======

Basic Earnings Per Share     As Reported         $  0.55           $  0.46
                             Pro Forma              0.53              0.45

Diluted Earnings Per Share   As Reported         $  0.55           $  0.46
                             Pro Forma              0.53              0.45

                                       12
<PAGE>

                                                                      Schedule 6

                 PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002

     The following discussion provides information about Princeton National
Bancorp, Inc.'s ("PNBC" or the "Corporation") financial condition and results of
operations for the three months ended March 31, 2003 and 2002. This discussion
should be read in conjunction with the attached consolidated financial
statements and notes thereto. Certain statements in this report constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including,
but not limited to those statements that include the words "believes",
"expects", "anticipates", "estimates", or similar expressions. PNBC cautions
that such forward-looking statements involve risks and uncertainties that may
cause actual results to differ materially from those expressed or implied. Such
risks and uncertainties include potential change in interest rates, competitive
factors in the financial services industry, general economic conditions, the
effect of new legislation, and other risks detailed in documents filed by the
Corporation with the Securities and Exchange Commission from time to time.

RESULTS OF OPERATIONS
---------------------

     Net income for the first quarter of 2003 was $1,772,000, or basic and
diluted earnings per share of $0.55, as compared to net income of $1,518,000 in
the first quarter of 2002, or basic and diluted earnings per share of $0.46.
This represents an increase of $254,000 (16.7%) or $.09 per basic and diluted
share (19.6%). The increase in net income for the first three months of 2003 is
a result of an increase in net interest income and increased non-interest
income, partially offset by an increase in non-interest expense. The annualized
return on average assets and return on average equity were 1.22% and 14.14%,
respectively, for the first quarter of 2003, compared with 1.12% and 12.87% for
the first quarter of 2002.

     Net interest income before provision for loan losses was $4,946,000 for the
first quarter of 2003, compared to $4,661,000 for the first quarter of 2002 (an
increase of $285,000 or 6.1%). This increase is a result of an increase in
average interest-earning assets, offsetting a decrease in the net interest
margin. The net yield on interest-earning assets (on a fully taxable equivalent
basis) decreased from 4.06% in the first quarter of 2002 to 3.97% in the first
quarter of 2003. However, for the three months ended March 31, 2003, average
interest-earning assets were $538.6 million compared to $497.0 million for the
three months ended March 31, 2002, an increase of $41.6 million (or 8.4%).

     PNBC recorded a loan loss provision of $100,000 in the first quarter of
2003 compared to $225,000 in the first quarter of 2002. The provision expense
recorded each quarter is determined by the risk characteristics of the loan
portfolio, as well as the net charge-off activity for the quarter. For the
three-month comparable periods, PNBC had net charge-offs of $214,000 in 2003 and
$91,000 in 2002.

     Non-interest income totaled $2,163,000 for the first quarter of 2003, as
compared to $1,893,000 during

                                       13
<PAGE>

the first quarter of 2002, an increase of $270,000 (or 14.3%). This is a result
of an increase in mortgage banking income of $362,000 (or 133.6%) due to fee
income generated from continued origination/refinancing and subsequent sales and
servicing of mortgage loans in the secondary market. Additionally, service
charges on deposit accounts increased by $51,000 in the first quarter of 2003,
an improvement of 7.6% over the first quarter of 2002. Income from trust and
farm management also reported a modest increase of 6.3% (or $19,000) when
comparing the first quarter of 2003 to the first quarter of 2002. These
increases more than offset a decrease in gains from sales of securities
available-for-sale of $40,000, as well as decreases in brokerage fee income
($48,000 or 26.9%) and other service charges ($32,000 or 19.4%).

         Total non-interest expense for the first quarter of 2003 was
$4,528,000, an increase of $293,000 (or 6.9%) from $4,235,000 in the first
quarter of 2002. The largest increases was in salaries/employee benefits, which
increased $130,000 (or 5.3%) due to increases in commissions from mortgage
banking operations as well as increased insurance costs. Other notable increases
were in other operating expenses, which increased $109,000 (or 12.8%) due to a
variety of small increases and in equipment expense, which increased $40,000
(11.2%) due to increased depreciation from the upgrade of bank technology.
Additionally impacting other operating expense was the Corporation's decision to
outsource the internal audit function. Given the continued growth of the
organization and the current focus on corporate accounting procedures, PNBC
believes this decision adds value to the organization, while also reducing
salaries/employee benefits expense.

INCOME TAXES
------------

         Income tax expense totaled $709,000 for the first quarter of 2003, as
compared to $576,000 for the first quarter of 2002. The effective tax rate was
28.6% for the three months ended March 31, 2003 compared to 27.5% for the three
months ended March 31, 2002.

ANALYSIS OF FINANCIAL CONDITION
-------------------------------

         Total assets at March 31, 2003 increased to $597,600,000 from
$587,375,000 at December 31, 2002 (an increase of $10.2 million or 1.7%). Total
deposits at March 31, 2003 increased to $525,166,000 from $511,267,000 at
December 31, 2002 (an increase of $13.9 million or 2.7%). As interest rates have
decreased over the past year, there continues to be a shift to savings and
interest-bearing demand deposits (which would include money market and NOW
accounts) and less of an increase in time deposits. Comparing categories of
deposits at March 31, 2003 to the December 31, 2002 totals: interest-bearing
demand deposits increased $6.8 million (or 4.4%), savings deposits increased
$4.2 million (or 8.1%), and time deposits increased $4.2 million (or 1.7%);
while demand deposits decreased by $1.3 million (or 2.3%). Borrowings,
consisting of customer repurchase agreements, notes payable, treasury, tax, and
loan ("TT&L") deposits, federal funds purchased, and Federal Home Loan Bank
advances, decreased from $19,491,000 at December 31, 2002 to $15,684,000 at
March 31, 2003 (decrease of $3.8 million or 19.5%). Investments totaled
$165,265,000 at March 31, 2003, compared to $169,318,000 at December 31, 2002 (a
decrease of $4.1 million or 2.4%).

         Loan balances, net of unearned interest, decreased to $361,712,000 at
March 31, 2003, compared to $364,120,000 at December 31, 2002 (a decrease of
$2.4 million or 0.7%). This is a reflection of typical lower loan demand during
this time of year, as well as seasonal pay-downs in the agricultural sector.
Non-performing loans totaled $4,425,000 or 1.23% of net loans at March 31, 2003,
as compared to $3,820,000 or 1.07% of net loans at December 31, 2002.

                                       14
<PAGE>

     For the three months ended March 31, 2003, the subsidiary bank charged off
$261,000 of loans and had recoveries of $47,000, compared to charge-offs of
$178,000 and recoveries of $87,000 during the three months ended March 31, 2002.
The allowance for loan losses is based on factors that include the overall
composition of the loan portfolio, types of loans, past loss experience, loan
delinquencies, potential substandard and doubtful credits, and such other
factors that, in management's reasonable judgment, warrant consideration. The
adequacy of the allowance is monitored monthly. At March 31, 2003, the allowance
was $2,546,000 which is 57.5% of non-performing loans and 0.70% of total loans,
compared with $2,660,000 which was 69.6% of non-performing loans and 0.73% of
total loans at December 31, 2002.

     At March 31, 2003, impaired loans totaled $2,135,000 compared to $2,230,000
at December 31, 2002. Loans 90 days or more past due and still accruing interest
at March 31, 2003 were $1,000,000, compared to $23,000 at December 31, 2002.
Although the balances of non-performing and impaired loans have increased from
the level of prior years, the total continues to be concentrated in a few
credits. Additionally, approximately 85% of the balance of loans 90 days or more
past due has subsequently paid-off. There is a specific loan loss reserve of
$173,000 established for impaired loans as of March 31, 2003 and December 31,
2002. PNBC's management analyzes the allowance for loan losses monthly and
believes the current level of allowance is adequate to meet probable losses as
of March 31, 2003.

CAPITAL RESOURCES
-----------------

     Federal regulations require all financial institutions to evaluate capital
adequacy by the risk-based capital method, which makes capital requirements more
sensitive to the differences in the level of risk assets. At March 31, 2003
total risk-based capital of PNBC was 12.22%, compared to 11.74% at December 31,
2002. The Tier 1 capital ratio increased from 7.80% at December 31, 2002, to
7.89% at March 31, 2003. Total stockholders' equity to total assets at March 31,
2003 decreased to 8.59% from 8.70% at December 31, 2002.

LIQUIDITY
---------

     Liquidity is measured by a financial institution's ability to raise funds
through deposits, borrowed funds, capital, or the sale of assets. Additional
sources of liquidity include cash flow from the repayment of loans. Major uses
of cash include the origination of loans and purchase of investment securities.
Cash flows provided by financing, operating, and investing activities, resulted
in a net increase in cash and cash equivalents of $17,969,000 from December 31,
2002 to March 31, 2003. This increase was due to a net increase in deposits, as
well as a net decrease in loans and investments. For more detailed information,
see PNBC's Consolidated Statements of Cash Flows.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
-------------------------------------------------

     The subsidiary bank is party to financial instruments with off
balance-sheet risk in the normal course of business to meet the financing needs
of its customers. These financial instruments include commitments to extend
credit and standby letters of credit. Those instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheets. The contract amounts of those
instruments reflect the extent of involvement the subsidiary bank has in
particular classes of financial instruments.

                                       15
<PAGE>

     The subsidiary bank's exposure to credit loss in the event of
non-performance by the other party to the financial instrument for commitments
to extend credit and standby letters of credit is represented by the contractual
notional amount of those instruments. The subsidiary bank uses the same credit
policies in making commitments and conditional obligations as they do for
on-balance-sheet instruments. At March 31, 2003 and commitments to extend credit
and standby letters of credit were approximately $89,040 and $1,792,
respectively.

     Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The subsidiary bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary, by the subsidiary bank upon extension of credit
is based on management's credit evaluation of the counterparty. Collateral held
varies, but may include real estate, accounts receivable, inventory, property,
plant and equipment, and income-producing properties.

     Standby letters of credit are conditional commitments issued by the
subsidiary bank to guarantee the performance of a customer to a third party. The
credit risk involved in issuing standby letters of credit is essentially the
same as that involved in extending loan facilities to customers. The subsidiary
bank secures the standby letters of credit with the same collateral used to
secure the loan.

LEGAL PROCEEDINGS
-----------------

     There are various claims pending against PNBC's subsidiary bank, arising in
the normal course of business. Management believes, based upon consultation with
legal counsel, that liabilities arising from these proceedings, if any, will not
be material to PNBC's financial condition.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------

     There has been no material change in market risk since December 31, 2002,
as reported in PNBC's 2002 Annual Report on Form 10-K.

EFFECTS OF INFLATION
--------------------

     The consolidated financial statements and related consolidated financial
data presented herein have been prepared in accordance with accounting
principles generally accepted in the United States of America and practices
within the banking industry which require the measurement of financial condition
and operating results in terms of historical dollars, without considering the
changes in the relative purchasing power of money over time due to inflation.
Unlike most industrial companies, virtually all the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have a
more significant impact on a financial institution's performance than the
effects of general levels of inflation.

                                       16
<PAGE>

PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY

     The following table sets forth (in thousands) details of average balances,
interest income and expense, and resulting annualized rates for the Corporation
for the periods indicated, reported on a fully taxable equivalent basis, using a
tax rate of 34%.

<TABLE>
<CAPTION>
                                                   --------------------------------------------------------------------------
                                                    THREE MONTHS ENDED, MARCH 31, 2003     Three Months Ended, March 31, 2002
                                                   --------------------------------------------------------------------------
                                                    AVERAGE                     YIELD/     Average                     Yield/
                                                    BALANCE      INTEREST       COST       Balance      Interest       Cost
                                                   --------      --------      --------   --------      --------      -------
<S>                                                <C>           <C>              <C>     <C>           <C>              <C>
AVERAGE INTEREST-EARNING ASSETS

Interest-bearing deposits                          $  5,797      $     16         1.12%   $  6,585      $     25         1.54%
Taxable investment securities                       115,299         1,177         4.14%     97,050         1,307         5.46%
Tax-exempt investment securities                     51,753           950         7.44%     48,524           915         7.64%
Federal funds sold                                    7,219            20         1.12%      8,759            35         1.62%
Net loans                                           358,500         5,988         6.77%    336,113         6,287         7.59%
                                                   --------      --------                 --------      --------

      Total interest-earning assets                 538,567         8,151         6.14%    497,030         8,569         6.99%
                                                   --------      --------                 --------      --------

Average non-interest earning assets                  50,262                                 51,551
                                                   --------                               --------

      Total average assets                         $588,829                               $548,581
                                                   ========                               ========

AVERAGE INTEREST-BEARING LIABILITIES

Interest-bearing demand deposits                   $158,474           560         1.43%   $118,822           539         1.84%
Savings deposits                                     53,437           103         0.78%     56,452           200         1.44%
Time deposits                                       247,206         2,106         3.46%    246,246         2,710         4.46%
Interest-bearing demand notes
   issued to the U.S. Treasury                          747             2         1.16%      1,370             7         1.98%
Federal funds purchased and
   securities repurchase agreements                   9,047            17         0.78%     11,913            33         1.14%
Advances from Federal Home Loan Bank                  5,757            78         5.53%      6,425            88         5.58%
Borrowings                                            1,300            10         3.25%      1,550            15         3.81%
                                                   --------      --------                 --------      --------

      Total interest-bearing liabilities            475,968         2,878         2.45%    442,780         3,591         3.29%
                                                   --------      --------                 --------      --------

Net yield on average interest-earning assets                     $  5,273         3.97%                 $  4,978         4.06%
                                                                 ========                               ========

Average non-interest-bearing liabilities             62,027                                 57,973

Average stockholders' equity                         50,834                                 47,829
                                                   --------                               --------

             Total average liabilities and
                stockholders' equity               $588,829                               $548,581
                                                   ========                               ========
</TABLE>

                                       17
<PAGE>

SCHEDULE 7. CONTROLS AND PROCEDURES


         (a)      Disclosure controls and procedures. Within 90 days before
                  filing this report, we evaluated the effectiveness of the
                  design and operation of our disclosure controls and
                  procedures. Our disclosure controls and procedures are the
                  controls and other procedures that we designed to ensure that
                  we record, process, summarize and report in a timely manner
                  the information we must disclose in reports that we file with
                  or submit to the SEC. Tony J. Sorcic, President and Chief
                  Executive Officer, and Todd D. Fanning, Vice-President and
                  Chief Financial Officer, reviewed and participated in this
                  evaluation. Based on this evaluation, Messrs. Sorcic and
                  Fanning concluded that, as of the date of their evaluation,
                  our disclosure controls were effective.

         (b)      Internal controls. Since the date of the evaluation described
                  above, there have not been any significant changes in our
                  internal accounting controls or in other factors that could
                  significantly affect those controls.










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